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Somlalit Institue of Business Managment

Stratagic Management



Case Study
Coca-Cola vs. Pepsi in India: The Battle of the Bottle Continues



Submitted to:- Prof. Karan Shastri
Prepared By:- Vasani Milan A.
PGDM-Marketing
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Problem Definition:-
The fluctuating market share of Pepsi and Coca- Cola in the beverage industry.

Case Summary :-
PepsiCo is one of the world's most familiar consumer food and beverage companies,
offering brands like Frito-Lay, Gatorade, Tropicana and Quaker.It's best known, of course,
for is its flagship soft drink brand and its rivalry with Coca-Cola.The Coke vs. Pepsi conflict
raged on for decades across the country on supermarket shelves, fast food restaurants and the
like.Coke always held the bigger market share in this area. But at times, Pepsi - fueled by
smarter and more aggressive advertising campaigns - moved ahead.
In 1975, Pepsi began showing people in blind taste tests called the Pepsi Challenge, in which they
preferred one product over the other, and then they began hiring increasing numbers of popular
spokespersons to promote their products.coke always had an strong distribution channel which
competes the pepsico india.while pepsico having strong enough advertisment campaign.
At present we can see that coke is market leader with strong base and now they also have excellent
advertisement campaign. With cocacola and thumbsup brand pepsi is facing tough competition in
market.
Conclusion :-
In softdrinks market of india, pepsico and cocacola are the only two market leaders.that is why there
is continuous cola war between them for being an market leader.both have them own competecies
but no one is perfect, there are some space for improvement for both to dominate the market.

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PESTLE Analysis of soft drinks industries in India
a) Political: Political change from one party to another and change in government
laws. Due to change in central government from the Congress Party to the Janata
party Coca cola was asked by the new government to reduce its equity holding to
40 % and to share the secret behind the concentrate enabling its local manufacture.
Both these conditions were not accepted by the company and hence they withdrew
from India. Liberalization in 1990s helped the multinational soft drink players to
enter Indian market
b) Economical: Market was sensitive to the prices offered by the local competitors.
Also the soft drink market was quite cyclical with nearly 40% sales happening
during summer. So the companies had to spend on their advertising of products to
endorse customers. Also per capita consumption was low as soft drinks were less
preferred by people.
c) Social: Soft drinks were generally not very popular in India in 1950s and early
1960s. Also preference for soft drinks over other beverages like tea coffee, fruit
juices, etc. was less.
d) Technological: Manufacturing and bottling plants were highly capital intensive
and highly automated, involving sophisticated machinery and required Up
gradation and modernization which were also expensive and bottlers had no
interest in investing in the same. So the soft drink companies had to invest in this
in order to increase their sales.
e) Environmental: There are suppliers who are also part of society like
manufacturers of bottles, sugar supplier, water supplier, cooling equipment
supplier, advertising agencies, event managers and promotion agencies and
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research agencies. Other environmental factors rather than this are customers,
competitors, change in market, etc.
f) Legal: Because both of the firm are from abroad so legal aspects more needed for
both. They both cannot directly invest so they both merged with Indian firms to
start business over here. When they introduced MRTP Act and FERA Act were in
charge. So Coca Cola merged with Parle an Indian firm. For setting up new
manufacturing set up in India legal aspects needed to be fulfilled.

Resources and Capabilities of Pepsi:
Resources for Pepsi are their innovation regarding new product and innovation in marketing of same
product and their technology.
We all know that Pepsis direct competitor Coca Cola have two products in same segment like Coca
Cola itself and Thums up but Pepsi have only brand in Cola segment though they are competing with
rivals because of their great marketing efforts. The marketing campaign that Pepsi runs in India are
best.
With this innovation in marketing as resources Pepsi have large scale manufacturing and large
distribution channel as their capabilities for their all segment products like cola segment, mango,
orange, lime, etc.



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Core competencies:
Product integration and Innovation
The first core competency is their product integration and innovation. PepsiCo is able to
enhance their product line by carrying fruit drinks, Gatorade, and Frappuccino. This allows
them to promote their products and services more efficiently while being able to reach a
much broader group of individuals. Through integration, they are able to eliminate potential
competitors, while creating a more diverse product line.
Branding & Marketing
Secondly, Pepsis strength lies in its branding and marketing. Pepsi had always come up with
the unique ad campaigns focusing towards its target market. This uniqueness in advertising
and branding has given it a competitive advantage over its competitors. Pepsi target audience
is mostly teens and young adults and their advertising reflects this in every possible manner.
Some of Pepsi successful Ad campaigns like Yeh dil maange more, Oye Bubbly and
Youngistan created a huge impact on its Target group.

Apart from these, several factors mentioned below have been PepsiCo strength over the
years, and still they are backing up its core competencies in different possible way.
- Savings resulting from economies of scale.
- Number 1 maker of snacks, such as corn chips and potato chips.
- Merger combined two strong companies, PepsiCo and Quaker Oats.
- Company does more than just soft drinks.
- Merger combined more than carbonated and noncarbonated drinks.
- Not all PepsiCo products bear the company name.